Rampant D4 RIN generation continues heavy lifting versus dismal D5s

D4 biomass-based diesel RIN generation almost kept pace with last month’s record high, seeing a total of 395mn D4 RINs generated in September 2016, down around 3mn RINs or less than 1% MoM but still up 60% YoY. The D4 RINs generated in the first nine months of this year now account for over 77% of targeted full year consumption. This is still above the rate seen at the same time last year. The D4 generation progress calculation includes banked RINs carried over from 2015 into 2016, and also assumes the market will plan to carry 20% of the statuary mandate into 2017. It also assumes a 20% annual decline in D5 generation against the D5 shortfall that D4s will otherwise need to plug. D5 RIN generation meanwhile saw a spectacular drop to 4.9mn RINs in September, down 70% MoM and 79% YoY. Total YtD generation through September has contributed just 14.9% of the D5 mandate set out in the RVO thanks to the huge mandates published for 2016, keeping generation progress well below the level seen at the same time last year. No RINs were reported generated by importers in this category, illustraying the impact of sky high Brazilian sugarcane ethanol prices. D6 RIN generation fell by 5.77% MoM to 1.25bn RINs in September, still representing modest growth of 3% YoY. D6 RIN output reported so far this year has breached just 68% of total annual mandated demand, less than the 71% seen at the same time last year, assuming a rational 20% RIN carryover from 2016 into 2017. D3 RINs reached only between 53%-65% of targeted annual generation through September. MoM growth was at 10.35% to lift output to 17.24mn gal.